India’s telecom companies head into the June-quarter earnings season with a familiar story getting a new twist: Bharti Airtel keeps growing, but increasingly it’s the African market doing the heavy lifting, while Vodafone Idea, after years of bleeding subscribers, finally looks like it has found a floor, as per the latest report by Nomura.
Africa is now Airtel’s growth engine
Bharti Airtel‘s India wireless business is still growing, just not as fast as the rest of the company. Nomura expects the domestic wireless unit to bring in Rs 29,510 crore this quarter, a modest 2% rise from the previous three months, with subscriber additions of about 4 million, a bit slower than the 4.7 million added last quarter. ARPU may go up to roughly Rs 260 a month, the report noted.
The real action is in Africa. Nomura pegs Africa revenue at Rs 17,600 crore, up 10% sequentially and a striking 46% higher than the previous year. According to the report, a weaker dollar helped, as did continued strong subscriber additions across the continent. Add it all up with the Homes, Enterprise and DTH businesses, and Nomura expects Airtel’s consolidated revenue to come in at Rs 57,620 crore, up 16% year-on-year, with EBITDA rising 5% sequentially to Rs 32,970 crore.
Jio just keeps adding people
Reliance’s telecom arm doesn’t have Africa to fall back on, but it doesn’t need it. Nomura expects Jio Platforms to have added around 8 million subscribers in the quarter, taking its base past 532 million, with revenue climbing 3% sequentially to Rs 39,580 crore. ARPU is seen rising a little too, to about Rs 217 a month.
According to the report, net income is estimated at Rs 7,910 crore, up 13% from the previous quarter and 22% from a year ago, helped along by a slightly fatter EBITDA margin of 52.7%.
Vodafone Idea’s decline finally stops
The more interesting number in the whole report might be Vodafone Idea‘s subscriber base, which Nomura expects to have grown by roughly 350,000 to 193.2 million, effectively flat but a real change in direction after several quarters of steady drop. Tariff hikes are doing what they were meant to do: ARPU is seen rising to about Rs 177 a month, up from Rs 174, pushing revenue up 2% sequentially to Rs 11,510 crore.
Nomura expects Vodafone Idea to post a net loss of Rs 5,600 crore for the quarter, a sharp reversal from the previous quarter’s profit, which was itself a one-off tied to AGR relief rather than underlying performance.
Year-on-year, though, the loss is estimated to have narrowed by about 15%. Nomura rates the stock Neutral, with a target price of Rs 12.60. As of July 8, Vodafone Idea closed at Rs 13.93 on the NSE. The report further mentioned that lingering risks around deferred payment obligations and further AGR-related uncertainty are the reasons behind the rating.
Indus Towers: steady, unremarkable, dividend-friendly
Indus Towers doesn’t have a growth story so much as a maintenance one. Nomura expects the company to have added about 3,000 towers during the quarter, taking its total base to roughly 268,000, with the tenancy ratio holding at 1.62 times. Revenue is seen rising 2% both sequentially and year-on-year to Rs 8,250 crores, with EBITDA margins steady around 55%.
Revenue per tower and per tenant both slipped about 1% sequentially, as per the report. The brokerage rates the stock a Buy, with a target price of Rs 505, citing Vodafone Idea’s improving stability as one reason for optimism.